Baidu, China’s largest internet search and maps provider, continues to see slowing business as it adapts to the rise of mobile. The company’s latest Q1 2015 financial report continued an ongoing decline in revenue growth and saw net profit dip year-on-year too.
Last year, the number of mobile internet users in China overtook that of PCs, indicating that a shift to mobile is wholly necessary for any tech company operating in the country. While mobile accounted for half of Baidu’s revenue for the first time in Q1 2015, up from 37 precent across its fiscal year 2014, key financial indicators show the transition isn’t quite so smooth.
Baidu’s total revenue for the quarter came in at RMB 12.725 billion ($2.053 billion). That’s 34 percent higher than one year previous, but the figure represents a decline in annual revenue growth compared to recent quarter. In Q4 2014, the previous quarter, Baidu’s annual revenue growth was 47.5 percent; that number was 52 percent in Q3 2014; 58.5 percent in Q2 2014; and 59.1 percent in Q1 2014.
So, yes, Baidu’s revenue continues to grow, but its rate of growth has tumbled sequentially this past year.
Profit is down too. Baidu’s Q1 2015 operating profit of RMB 2.155 billion ($347.7 million) represents a 9.2 drop on Q1 2014. Net income fell 3.4 percent over the past year to reach RMB 2.449 billion ($395.1 million) in Q1 2015.
Baidu chairman and CEO Robin Li focused on the growth of mobile in a statement:
Mobile’s tremendous momentum continued this quarter, with mobile contributing 50% of total revenue. Baidu is redefining the search box by building an ecosystem to connect people with services and drive closed loop transactions. Baidu’s platform is comprehensive and robust, and we plan to fully exploit the huge growth potential ahead — in mobile marketing, online to offline, and key select verticals such as healthcare, education and financial services — by leveraging our solid mobile foundation, exceptional technology advantage, and proven operational experience.
The company retains its position as China’s top search engine — with around 80 percent marketshare — and it runs China’s de facto maps service. It has experimented with an Android operating system (which was recently closed), has introduced web apps, and it forked out $1.9 billion to buy top app store 91Wireless, among other strategies to diversify.
Beyond these services, it is focusing its efforts on big data and deep learning. Baidu hired former Google exec Andrew Ng as chief scientist for its U.S.-based lab, and — separately — it is developing language technologies that will enable it to introduce services in a range of emerging markets in Southeast Asia, Latin America and North Africa.
At this point, it isn’t clear exactly how Baidu will use these technologies in its business — beyond the comments Li made above — but clearly mobile is the focus point for its future strategies.
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